Applications Take a Holiday in MBA Weekly Surveys

MBA NewsLink Staff

January 03, 2019

As usual, the holiday season proved it's not the best time for mortgage applications, even with the lowest interest rates in three months.

The Mortgage Bankers Association reported mortgage applications decreased by nearly 10 percent from two weeks earlier, according to data from its Weekly Mortgage Applications Survey for the week ending December 28, 2018. The results include adjustments to account for the Christmas holiday.

The Market Composite Index decreased by 9.8 percent on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased by 46 percent compared to two weeks ago.

The (unadjusted) Refinance Index decreased by 12 percent from two weeks ago. The refinance share of mortgage activity decreased to 42.7 percent of total applications from 43.6 percent the previous week.

The seasonally adjusted Purchase Index decreased by 8 percent from two weeks earlier. The unadjusted Purchase Index decreased 46 percent compared to two weeks ago and was 6 percent lower than the same week one year ago.

"Mortgage applications fell over the past two weeks--even as the 30-year fixed-rate mortgage decreased to 4.84 percent, its lowest since September," said MBA Associate Vice President of Economic and Industry Forecasting Joel Kan. "Investors continued to show a preference for safer U.S. Treasuries, as concerns over U.S. and global economic growth, along with uncertainty over the current government shutdown, drove rates lower."

Kan noted ev with lower borrowing costs, both purchase and refinance applications decreased over the two-week holiday period, as both conventional and government applications dropped. "Part of the decline in mortgage applications was possibly because of the government shutdown, as concerns over delays in FHA application processing times likely contributed to the weakness in activity," he said.

While the index changes were calculated relative to two weeks prior, the following compositional and rate measures are presented relative to the previous week only.

The FHA share of total applications increased to 10.0 percent from 9.7 percent the week prior. The VA share of total applications increased to 11.0 percent from 10.1 percent the week prior. The USDA share of total applications decreased to 0.6 percent from 0.7 percent the week prior.

MBA reported the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.84 percent from 4.86 percent, with points decreasing to 0.42 from 0.47 (including origination fee) for 80 percent loan-to-value ratio loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100) increased to 4.72 percent from 4.59 percent, with points increasing to 0.30 from 0.28 (including origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by FHA decreased to 4.86 percent from 4.91 percent, with points decreasing to 0.54 from 0.57 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.25 percent from 4.31 percent, with points increasing to 0.60 from 0.50 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 adjustable-rate mortgages decreased to 4.16 percent from 4.23 percent, with points decreasing to 0.34 from 0.36 (including origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The ARM share of activity remained unchanged at 7.6 percent of total applications.

The survey covers more than 75 percent of all U.S. retail and consumer direct residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.

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